France: Latest developments in working life Q2 2019

Reforms in response to the gilets jaunes crisis, the new PACTE law, unemployment insurance reform, and compensation for asbestos-related anxiety are the main topics of interest in this article. This country update reports on the latest developments in working life in France in the second quarter of 2019.

Government presents six-month reform action plan

After its success in quelling the gilets jaunes (yellow vests) crisis by implementing several measures to improve purchasing power, [1] the government is keeping up with the pace of its planned reforms.

On 25 April, President Emmanuel Macron presented measures resulting from the recent wide national debate (conducted in response to the gilets jaunes movement) and announced a ‘general mobilisation’ for work and employment. On 29 April, Prime Minister Édouard Philippe presented a six-month action plan, which included an unemployment insurance reform to be introduced in June (which was contested by trade unions), a pension reform expected to be presented at the end of the summer, and a law to address the dependency of elderly people planned for the autumn. On 2 May, the government unveiled its first assessment of the exceptional tax-free bonus introduced in response to the gilets jaunes crisis, which led to approximately 5.5 million employees receiving an average bonus of €400 from their employer and 20% of private sector companies paying bonuses. [2]

New law to boost recruitment and protect platform workers

The PACTE law (Action Plan for Business Growth and Transformation), adopted on 11 April, introduced new rules around workforce thresholds to simplify job creation and encourage companies to recruit. The aim of the law is to prevent exceeding certain thresholds from leading to an immediate increase in social security contributions or new constraints in the field of labour law. The law also reforms different kinds of employee savings schemes to make them more attractive for both companies and employees, encourages companies to consider their social and environmental impact, and increases the number of employee directors serving on boards of directors.

The draft Mobility Orientation Law (LOM) was adopted on 18 June at the French Assembly. As of 1 January 2020, it will provide measures to encourage the use of alternative transport and allow employers to cover the travel expenses of employees who commute by bicycle or carpool (whether they are a driver or a passenger). The payment will be made free of tax for employees and free of social security contributions for employers, and consist of a maximum of €400 per year.

In addition, the proposed law will oblige platforms employing delivery staff or drivers to be more transparent: before each job, platform workers must be informed of the distance they would need to cover and the minimum guaranteed price for the service. Workers will be able to decline a job without being subject to sanctions, and the platform may not terminate its contractual relationship with workers on the grounds that they have declined one or more jobs. This means that workers will be able to choose their working hours and periods of inactivity.

The platforms will also be able to sign a charter aimed at improving the working conditions and social protection of workers without the need to requalify their contractual relationship as that of a salaried employee.

Unemployment insurance reform proves controversial

After social partners failed to negotiate a reform of unemployment insurance in the first quarter of 2019, the government presented its own reform for the first time since 1982. This far-reaching reform tightens the rules for obtaining compensation and strengthens support for the unemployed. It also introduces a bonus–malus system for social security contributions paid by employers for unemployment insurance, penalising those sectors of activity that make the greatest use of short-term contracts (such as accommodation, catering and agri-food).

The reform extends unemployment rights for resigning and self-employed workers, while jobseekers who have a gross income of more than €4,500 per month will have their compensation reduced by 30% from the seventh month. According to the government, the reform aims to cut unemployment by up to 250,000 people and reduce the debt of the unemployment insurance system, saving €3.4 billion by the end of 2021. According to Prime Minister Philippe, the current system is dysfunctional because compensation rules encourage too much precarious work and not enough ‘return to work’.

The trade unions unanimously denounced this reform, with the French Confederation of Professional and Managerial Staff (CFE-CGC) claiming that the degressive nature of the allowances would have a negative impact on white-collar workers and managers. Laurent Berger, the general secretary of the French Democratic Confederation of Labour (CFDT), described the measures as ‘deeply unfair’ and ‘extremely harsh’ for precarious workers alternating between periods of employment and unemployment. Catherine Perret, an official from the General Confederation of Labour (CGT), said that the reform was both ‘iniquitous’ and ‘ineffective’.

On the employer side, the bonus–malus system for short contracts received the greatest criticism. Geoffroy Roux de Bézieux, President of the Movement of the Enterprises of France (MEDEF), regretted an ‘ineffective measure that will discourage employment’. According to François Asselin, President of the Confederation of Small and Medium-sized Enterprises (CPME), ‘an employer will think twice’ before hiring.

Compensation for anxiety related to asbestos

On 5 April, the Court of Cassation ruled that any employee who can demonstrate exposure to asbestos under conditions likely to compromise their health has the right to seek compensation from their employer for anxiety linked to the risk of developing an asbestos-related disease. This action is based on the employer's obligation under ordinary law to provide a safe working environment and the court must determine the level of anxiety suffered by the employee.

This judgment overturned the court’s previous case law on the matter. Prior to this decision, only employees who met certain specific criteria and/or worked for companies specified in a list established by law were able to claim compensation.

Commentary

The gilets jaunes movement does not appear to have diverted the government from its reformist trajectory, with the announcement of an unemployment insurance reform that will be make things more difficult for precarious workers. Consultations are also underway on a future pension reform. While social partners are participating in these talks, there are reports of them feeling increasingly marginalised by the government.